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PIMCO Hunkers Down, Not Buying Much Of Anything Anymore In Anticipation Of "Disinflation"

Submitted by Tyler Durden on 01/04/2010 05:19 -0400

PIMCO is cutting its exposure to all asset classes, confirming what all but equity chasers (yes, futures are up massively as the futures manipulation scam continues unabated) seem to know - the Fed buffet is now closed:

This all leaves us with portfolios that appear, more than at other times, to be hugging the benchmarks with no bold positioning. Some might suggest we’ve become closet indexers, but, on the contrary, we’re making a very active decision to run light on risk. At this point, we know this is not going to be a particularly high-yielding portfolio. You can only eat what’s in the cafeteria, and right now the cafeteria doesn’t have anything particularly appetizing in it.

We expect the next monthly set of data from the Total Return Fund to indicate that the fund is now in aggressive cash retention mode, taking advantage of the last few months of unbridled Fed generosity.

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Mon, 01/04/2010 - 08:10 | 181855 Spitzer

They deserve some credit for not being long financials and RIETS

Mon, 01/04/2010 - 09:22 | 181871 Anonymous

Two places they are adding to their position EM
corporates and Build America Bonds. I would imagine they have been doing this in 2009. We all know those two
asset classes represent value I just wonder how
they will find enough supply in these markets to
make a dent in their returns. BAB maybe but EM corps?
EM corps is not a big enough market to satisfy their
appetite, noone is a seller unless there is a fundamental reason to do so therefore why would you buy it? Maybe they see a big 2010 new issue pipe then you have the allocation
issue. Now that they have given these two markets their blessing maybe they will be taking profits. Bottom line
there goes the neighorhood as they say.

Mon, 01/04/2010 - 10:01 | 181889 Anonymous

Thanks for this, excellent and well written analysis from Pimco.

Mon, 01/04/2010 - 10:07 | 181893 litoralkey

Some reading for you all.

http://financialexecutives.blogspot.com/2009/12/subsequent-events-propos...

Thursday, December 31, 2009
Subsequent Events Proposal Issued By FASB; Final ASUs Incorporating FAS 166, 167 Into Codification

Mon, 01/04/2010 - 12:56 | 182039 Anonymous

Can you explain how this would affect PIMCO and the markets? Thanks in advance, 'key.

Wed, 12/15/2010 - 05:59 | 807418 Karston1234

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Wed, 12/15/2010 - 05:58 | 807416 Karston1234

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Mon, 01/04/2010 - 10:26 | 181898 john_connor

The recovery-less recovery is about to get taken down by oil and rising long bond rates. What say you, O-team?

I like PIMCOs positioning by the way. Would rather have money in the Total Return Fund then say, a money market.

Mon, 01/04/2010 - 10:52 | 181916 Gimp

Market is up this morning on an upgrade of the financial sector???

Not playing this hand or any hand for a while I think is the safest play.

Mon, 01/04/2010 - 11:04 | 181928 Scooby Dooby Doo

Maybe they know something?

Fed Chief Edges Closer to Using Rates to Pop Bubbles

Bernanke Sees Monetary Policy as Potential Antidote, but Blames Lax Regulation -- Not Central Bank Policies -- for Housing Crisis

http://online.wsj.com/article/SB126253288955613905.html

Will the Fed be making direct calls to the Reston 6 to keep equities prop'ed up? Ben says 'Yes'.

Mon, 01/04/2010 - 11:07 | 181933 Ivanovich

Gap up erases all loses from prior day. Risk orgy set to continue. Regardless of all the folks moving to cash, the market could care less. Up and away....!

Mon, 01/04/2010 - 11:23 | 181951 BobPaulson

Yes, autopilot seems to be on as usual. Starting as a standard carry trade day.

Mon, 01/04/2010 - 11:44 | 181973 Ivanovich

I'd argue that's it's even better than your standard day. Have ya seen AUD/USD? Whee....

Mon, 01/04/2010 - 11:48 | 181977 TumblingDice

I would not bet against these guys. I can see interest rates go up in the near future, before they become buyers again.

Mon, 01/04/2010 - 12:31 | 182017 D.M. Ryan

So they expect disinflation. That's actually the best scenario for bonds right now, given the massive reflationary efforts over the past fifteen months.

Mon, 01/04/2010 - 12:33 | 182019 Anonymous

It looks as if they are shorting certainty and are long insecurity.

Or, to put it another way, if the issuance/roll-over of Treasuries weren't creating the deepest gravitation field dimple in the history of humankind's adventures in capital markets (eh, a bit of dramatic hyperbole is always fun), we might be longer out on the duration curve, but we believe supply will swamp the far reaches.

Will equities be able to evade the gravitation tug? Will our beleaguered crew be able to escape the demonic designs of the mad Dr. Hans Reinhardt? Toss a coin.

Mon, 01/04/2010 - 12:37 | 182022 bugs_

How much GOLD can they put in that TOTAL
RETURN FUND?

Mon, 01/04/2010 - 12:46 | 182026 Anonymous

Zero Hedge:

Can you tell me why the bank's secondaries have gone so well, with all the banks trading above offer prices. Who are the buyers?

Mon, 01/04/2010 - 13:15 | 182054 MarketTruth

Guys and gals, if the USA stock market is up 1% yet the USD index/value is down 1.5% have you really made 'money'? Think about it.

Mon, 01/04/2010 - 13:32 | 182067 BobPaulson

Depends if you borrowed the money at 0.0001% margin using valueless paper as collateral.

Mon, 01/04/2010 - 13:37 | 182071 Selah

Not if you have your "money" in the casino, err... USA stock market. Furthermore, you don't make or lose money until you sell, and then you must make the macro-decision of what you consider "money" to be.

J.P. Morgan said, "Gold is money, nothing else."

If he was alive today, he'd probably say, "Gold is money, bitches!"

Mon, 01/04/2010 - 20:28 | 182528 Anonymous

Given what's happened to the gold/dollar relationship in the past 100 years, I highly doubt JP Morgan would say anything of the sort.

Mon, 01/04/2010 - 13:39 | 182078 Ivanovich

Yes, pretty much. The drop in the USD isn't reflected as 1.5% in my ability to spend dollars in the US. In otherwords, if I make 1% (1,000) on my $100,000 account today, that $1000 still goes nearly as far as it did yesterday, so long as I'm not purchasing something priced in foreign currency.

Mon, 01/04/2010 - 14:09 | 182112 Anonymous

Exactly.

Of course, eventually this will hit given that much of the physical goods purchased in this country are imported (or their components). Many big ticket items don't suffer this however (rent/mortgage).

Mon, 01/04/2010 - 22:48 | 182626 Anonymous

BEN--??? Is it you?!!

Mon, 01/04/2010 - 17:37 | 182377 Budd Fox

At least, if you live in the U.S. of A. you can pretend it didn't happen and feed the usual horseshit to Joe Bloke.

If you lived in Australia and held even gold currency unhedged you must be really bitching by now.

Mon, 01/04/2010 - 17:30 | 182367 _Biggs_

Nasdaq: STEC

Mon, 01/04/2010 - 18:12 | 182413 Anonymous

K.D. has an interesting post on Pimco, might be an early warning.

Mon, 01/04/2010 - 23:11 | 182644 Anonymous

Watch what they DO-- not so much what they say Grasshoppers...

Mon, 01/04/2010 - 21:11 | 182563 Anonymous

President Roosevelt signed executive order 6102 on April 5,1933 making private ownership of gold certificates, coins, and bullion illegal.Violation was punishable by fine up to $10,000($166,640 as of 2008) or up to 10yrs in prison or both. President Gerald Ford repealed the limitation on gold ownership on Dec 31,1974.My 91yr.old mother told me about this,so I researched it.They did it once,they could do it again. Also,could cashless transactions be the next step?

Wed, 11/03/2010 - 04:45 | 695271 Susancai

Now I see, thanks for the explanation to it. free advertising |job|tempurpedic mattress

Tue, 03/29/2011 - 01:58 | 1111760 fiona

PIMCO Hunkers Down, Not Buying Much Of Anything Anymore In Anticipation Of "Disinflation"

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